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UOB KAYHIAN |
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Ascott Residence Trust Venturing into maiden development project
■ ART is building the first millennial co-living property to tap on the untapped demand in the one-north research and innovation business hub in Singapore. ■ This greenfield expansion will generate a higher net yield of 6% and will be fully funded by debt with earnings impact to be felt only in 2021. ■ Maintain Hold with a lower target price due to limited catalysts.
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Keppel Corporation (KEP SP) Makes First Foray Into The Nanjing Property Market
Keppel acquires a 40% stake in an 8.8ha site in Nanjing, China, for S$283m. The acquisition provides a project that Keppel can quickly monetise. While the deal has its positive attributes, we refrain from being overly positive, given the weak fundamentals in the Nanjing property market. The earliest earnings impact from the deal is expected in late-19 or 2020, and we raise our 2020 net profit forecast by 1%. Our RNAV rises <1% on the acquisition. Maintain HOLD and target price of S$7.37. Entry price: S$6.60.
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| OCBC | RHB |
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Soilbuild REIT: Positive on the Aussie diversification Soilbuild Business Space REIT (Soilbuild REIT) has dropped 5.9% since its 7 Sep announcement on the proposed acquisition of two Australian assets. We believe that the recent decline in Soilbuild REIT’s unit price may have to do with concerns over the cost of perpetuals needed to fund the acquisition. While we note the expected DPU accretion is minimal, we see this proposed acquisition as a right step for Soilbuild REIT’s portfolio as it 1) increases the operational stability of the portfolio with its geographical diversification, longer WALE and in-built rental escalation and 2) the acquisitions increase the average land lease to expiry of the portfolio. Meanwhile, we look forward to Singapore’s industrial sector bottoming end-2018/early-2019 and believe that Soilbuild REIT is ready to participate on the upturn. As at 20 Sep’s close, we see an opportunity to collect units in the REIT 2-3 quarters before stronger signs of operational improvement are seen. We re-iterate BUY on Soilbuild REIT with a fair value of S$0.69.
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Thai Beverage
Cannot Be More Sober; Maintain BUY Maintain BUY with SGD0.88 TP, 31% upside. YTD share price has underperformed on weaker-than-expected alcohol consumption in Thailand and unfavourable deal-structure of the SABECO acquisition. Still, we think most of the downside risks have been priced in at current price levels. We believe improving farm income and Thailand’s upcoming election would boost overall consumption growth and alcohol demand.
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Check out our compilation of Target Prices
